ideas and resources for the global labor movement

March 26, 2007

New GLS Report: UNDUE INFLUENCE: Corporations Gain Ground in Battle over China's New Labor Law

A behind-the-scenes battle is raging worldwide over reforms in China’s labor law. On the one side are U.S.-based and other global corporations who have been aggressively lobbying to limit new rights for Chinese workers. On the other side are pro-worker rights forces in China, backed by labor, human rights, and political forces in the U.S. and around the world.

The battle is far from over, however. UNDUE INFLUENCE reveals that while publicly claiming to support the new legislation, companies like Wal-Mart, Microsoft, Google, General Electric and others have launched an unpublicized new attack demanding further gutting of the law's most important provisions.

But UNDUE INFLUENCE also discloses significant pushback by Chinese and international forces. U.S. members of Congress have introduced legislation decrying the corporate intervention and apparent Administration complicity; China's official labor organization, the All-China Federation of Trade Unions (ACFTU), has taken a strong stand against corporate pressure; international union federations have pressured their employers to reverse course; and human rights organizations have mobilized support for Chinese workers' rights.

Such counter-pressure has led to splits among global companies operating in China. Nike has virtually repudiated the efforts of the United States Chamber of Commerce in Shanghai (AmCham) to lobby against the law. And the E.U. Chamber of Commerce has reversed its opposition to the law and renounced its threat that its member companies may leave China if the law is passed. Undue Influence reveals this and other shifts among U.S. and E.U. corporations operating in China.

1. A behind-the-scenes battle is raging worldwide over reforms in China’s labor law. On the one side are U.S.-based and other global corporations who have been aggressively lobbying to limit new rights for Chinese workers. On the other side are pro-worker rights forces in China, backed by labor, human rights, and political forces in the U.S. and around the world.

2. Corporations operating in China are claiming success in pressuring the Chinese government to weaken or abandon significant pro-worker reforms it had proposed. Global Labor Strategy’s analysis of the revised draft of the law shows how many of their demands have been conceded.

3. Now both the American Chamber of Commerce in Shanghai (AmCham) and the US-China Business Council have launched an unpublicized new attack demanding further weakening of the law.

4. The Bush Administration recently revealed to the U.S. Congress that it has been “closely following” the drafting of the new labor contract law and that the American Embassy in China has been consulting AmCham on this matter. But the Administration appears to have done nothing to disassociate itself from the efforts of U.S. corporations and their representatives to restrict the rights of Chinese workers.

5. Chinese and international forces are engaged in a significant pushback against the gutting of China’s new labor law. U.S. members of Congress have introduced legislation decrying the corporate intervention and apparent Administration complicity; China’s official labor organization, the All-China Federation of Trade Unions (ACFTU), has taken a strong stand against corporate pressure; international union federations have pressured their employers to reverse course; and human rights organizations have mobilized support for Chinese workers’ rights.

6. Such counter-pressure has led to splits among global companies operating in China. Nike has virtually repudiated the efforts of the United States Chamber of Commerce in Shanghai (AmCham) to lobby against the law. And the E.U. Chamber of Commerce has reversed its opposition to the law and renounced its threat that its member companies may leave China if the law is passed.

7. The battle is likely to come to a head in the Chinese National People’s Congress in April or June of 2007. But the implementation of the new law, and the further expansion of Chinese workers’ rights, will depend on the rapid changes going on in Chinese labor relations, which are increasingly marked by burgeoning strikes, worker protests, lawsuits, and changing forms of labor organizations, including the expansion of the ACFTU into foreign invested enterprises such as Wal-Mart.

8. The new focus on the role of U.S. and other global corporations in China represents the emergence of a “new paradigm” for analyzing the current form of globalization not just in terms of a “trade debate” based on “free trade vs. protectionism,” but as a product of a global “sweatshop lobby” that is deliberately shaping labor law and labor markets around the world.

9. The role of China in the global economy is shaping up to be the dominant economic issue in the 2008 presidential elections in the U.S. With widespread anxiety about the security of U.S. jobs, the role of U.S. corporations in opposing rights for Chinese workers is emerging as a significant issue in those elections.